Steadying Supply

[dropcap class=”kp-dropcap”]G[/dropcap]reat news for local cannabis businesses and customers—the city of San Diego is finally starting to see its cannabis supply chain fall into place. The city has recently begun the process of holding hearings and issuing cannabis production facility conditional use permits.

These cannabis production facility permits are a unique classification system created by the city of San Diego’s ordinance, and the classification covers several business types including cultivation, manufacturing and distribution businesses. The cannabis production facilities system explicitly excludes retail operations. The ordinance allows for a maximum city-wide cap of 40 cannabis production facilities and does not place a per district cap as it does for cannabis retail businesses.

“Since passing the ordinance in 2017, the city has received some criticism for its slow pace in awarding permits.”

However, due to zoning laws and special use restrictions, most of the proposed businesses are located in Mira Mesa, Kearny Mesa and Otay Mesa. In order to obtain a permit, applicants need to submit detailed and expensive conditional use permits, show their properties are properly zoned and undergo extensive background checks.

Having a strong supply chain in San Diego is important for many reasons. From a public safety concern, having licensed and regulated manufacturers, cultivators and distributors right here in the city will create a competitive deterence to the illicit market. Additionally, the currently licensed San Diego retail shops will be able to offer customers locally sourced products. Moreover, having these businesses operating will generate millions in tax revenue for the city.

Since passing the ordinance in 2017, the city has received some criticism for its slow pace in awarding permits. Fortunately, a The San Diego Union–Tribune article noted that the city no longer requires as many greenhouse gas emission studies. This is a major relief to applicants as the greenhouse gas emission studies were lengthy and expensive, often costing $25,000 or more.

Setting aside the greenhouse gas emissions studies has finally allowed the city the chance to hold hearings and issue permits. The hearings are fairly straightforward and are mostly based on a strict land use analysis, which relies on the Development Services Department’s previous application review. As of Sept. 15, four cannabis productions facilities have been issued permits and many more are expected in the coming months.

The big challenge that remains for applicants is whether any of these permits will be appealed. The city allows for community feedback regarding the licensure of the cannabis production facilities, so individuals and community groups have the ability to appeal the city’s decision to award a permit. City officials have estimated that appeals will become the norm as the city approaches the cap of 40.

Hopefully, the city continues upon its recent progress and issues more permits in a fair and efficient manner. The city of San Diego was one of the first movers in the state to legalize commercial cannabis activities, and it’s nice to finally see that supply chain take shape.